MtGox bitcoin founder gets suspended sentence

Pulse News Agency International by AFP

March 15, 2019 2:57 AM

The high-flying creator of the MtGox bitcoin exchange received a suspended jail sentence of two and a half years after a Japanese court Friday found him guilty on charges of data manipulation.

Mark Karpeles, former head of the collapsed bitcoin exchange MtGox, has got a suspended sentence of two and a half years

The court convicted Mark Karpeles, a 33-year-old Frenchman, for falsifying computer data but acquitted him over charges of embezzling millions from client accounts.

The Tokyo District Court suspended the sentence for four years.

MtGox was shut down in 2014 after 850,000 bitcoins (worth half a billion dollars at that time) disappeared from its virtual vaults, a mystery that remains unsolved.

The scandal left a trail of angry investors, rocked the virtual currency community, and dented confidence in the security of bitcoin.

At one point, MtGox claimed to be handling around 80 percent of all global bitcoin transactions.

However, the charges faced by Karpeles, a self-confessed computer "geek" whose real first name is Robert, did not relate directly to the exchange's dramatic collapse.

During his trial, Karpeles apologised to customers for the company's bankruptcy but denied both data falsification and embezzlement.

"I swear to God that I am innocent," Karpeles, speaking in Japanese, told the three-judge panel hearing when his trial opened in 2017.

Karpeles always claimed the bitcoins were lost due to an external "hacking attack" and later claimed to have found some 200,000 coins in a "cold wallet" -- a storage device not connected to other computers.

"Most people will not believe what I say. The only solution I have is to actually find the real culprits," he told reporters his trial hearing in July 2017.

'Extremely vicious way'

However, prosecutors said that "Karpeles conducted himself in an extremely vicious way and he totally destroyed confidence in the exchange market."

Prosecutors had claimed the high-rolling Frenchman, 33, splashed the ill-gotten proceeds on a luxury lifestyle, as well as on overseas trips for his estranged wife.

They had called for him to spend 10 years behind bars.

The odds were stacked against Karpeles as the vast majority of cases that come to trial in Japan end in a conviction.

He said in an interview with French business daily Les Echos on Wednesday that he had little chance of acquittal.

"All I can hope for is a light sentence which will mean I do not have to go back into detention and do forced work," he said.

The Frenchman was first arrested in August 2015 and, in an echo of another high-profile case against former Nissan chief and compatriot Carlos Ghosn, was re-arrested several times on different charges.

Karpeles eventually won bail in July 2016 -- nearly a year after his arrest -- paying 10 million yen to secure his freedom pending a trial, which began in July 2017.

During his time on bail, Karpeles has been active on social media -- notably voicing doubts about bitcoin and replying to some media questions about conditions in Japanese detention centres.

However, he has largely avoided commenting on his case in detail.

In many ways, the rollercoaster ride of Karpeles has mirrored that of the bitcoin cryptocurrency that made him rich.

At its height in December 2017, the value of a single bitcoin was around $20,000.

It has since slumped and is now worth just under $4,000.

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